AEM, GLD - April 19, 2009

some charts courtesy of stockcharts.com

Gold stocks took a whacking, and AEM was at the forefront of it.



Two days of selling, knocked the stock down below the 45 level of support. It stopped at 32% retracement, next level of support, 40, is at 50% retracement.

It may find enough of a ground around here to bounce off its oversold readings, just for a trade, but given the volume of the selling these past 2 days, I will be wary of hanging on to a long postition for too long.

Across the board, it’s a mixeded bag with some stocks like ABX and KGC having their downtrends in place ahead of AEM, and some stocks like GG and MEM not in a mid-term downtrend yet.

Not having confirmed a mid-term downtrend does not necessarily mean that something is hot for a grab, this is Goldcorp

There is support in around 26.

This is Newmont

This mixed picture is now more pronounced, as all sorts of diggers have been correcting on good volume, but we started detecting signs of breadth deterioration quite a while back as I have been regularly posting updated breadth chart for the HUI index

Not a very pretty picture, is it?

remember I was pointing to the index below a trend line and just walking the underside of the line? Well, it now has broken another line.

Here are some other measures of the HUI index

The yellow metal is also in a mid-term downtrend

Recalling the channel play that I had on S&P futures some days ago, notice the three distinct channels that I have drawn since July 2008.

Also notice that the channels have been getting tighter. It might mean that the battle between bulls and bears have intensified and each group gives the other less swinging room than before.

Let’s keep an eye on the current channel, and on the longer term MAs, and see if we can get a bounce.

Volume was heavy on Thursday and Friday. GLD is very close to its 144 and 233 MAs, which correspond to 50% retracement of the rally, and may find some support for a bounce next week.

I am very interested in seeing how this evolves. If you remember the post from last week, I had two scenarios that looked like these

Short term bounces and pretty scenarios aside, quite a bit of damage has been inflicted on the sector, especially the diggers, and it may take a while for the it to heal properly.

Not all precious metal miners are technically damaged.

Silver Wheaton has been holding its ground so far


It is a rarity for one single issue to escape the selling of an entire sector, but If I am interested in gold (and silver diggers), I can use the off time to see who holds better, or corrects less, those may be among the leaders of the next rally.

Have a nice evening!